2012 is fast approaching, and with it comes big changes in the Federal IT industry. WashingtonExec is giving local executives the opportunity to share their thoughts on where they see the government contracting industry headed. Leaders of the industry were asked a series of predictions questions focused on challenging issues such as cloud computing, healthcare IT, defense and so forth.
Read Bill Hoover’s 2012 “prognostications” below. Hoover is CEO of AMERICAN SYSTEMS.
WashingtonExec: What will 2012 hold for Government contracting?
Bill Hoover: As Yogi Berra famously said, “It’s like déjà vu all over again!” 2011 will serve as a good preview of what to expect in 2012 … contentious political battles which will impact government funding and cause disruption to government and industry alike; lead to stalemate and recriminations from both political parties from both ends of Pennsylvania Avenue; however, there will be one significant difference … 2012 will culminate with a national election.
WashingtonExec: Will there be more M&A activity?
Bill Hoover: Given the fact that without further action by our elected officials, the current income and capital gains tax rates (a.k.a. “Bush Tax Cuts”) are scheduled to rise in January 2013, so I expect that we will see significant M&A activity throughout 2012. The activity will be similar to what the industry experienced in late 2006 and the first half of 2007 when the “recertification” rules went into effect. The added catalyst this time around will be the general uncertainty which surrounds the economy in general and the government services industry in particular.
WashingtonExec: Will there be more IT cuts?
Bill Hoover: Typically large bureaucracies, be they in government or industry, tend to make “even, across the board” cuts rather than focused cuts / eliminations. If that paradigm remains true, then I would expect that all elements of government would be reduced “equally”, to include IT. The potential exception to this has been DoD. Secretary Gates and Secretary Panetta seem to be concentrating on focused program eliminations.
*Featured in the 12/7 edition of the Fairfax County Economic Development Authority online magazine E-Bird.